TOKYO -- Japan will support the construction of liquefied natural gas terminals across Asia, aiming to take a leading presence in the expanding market before its position as world's largest buyer is overtaken by China in the near future.
Japan currently supports companies involved in LNG projects through investment and loan guarantees via a government-backed natural resource company -- Japan Oil, Gas and Metals National Corp., or Jogmec.
However, Jogmec is limited to aiding upstream operations, such as natural gas exploration and liquefaction plant construction.
New legislation would allow Jogmec to support investment in projects further downstream, such as LNG terminals in other countries so that they can import the fuel. Transporting the fuel over long distance efficiently also requires LNG to be reloaded at transshipment facilities, the development of which will also be aided under the plan.
As a relatively clean carbon-based fuel, global LNG demand is projected to double by 2040, according to the International Energy Agency. Japan is currently the biggest importer, but consumption is forecast to grow rapidly in Asian countries, with China seen as the biggest importer in 2040.
The easing of Jogmec's aid of the construction of LNG terminals is expected to help corporate Japan expand trade with other consuming countries. By helping top producers, such as the U.S., expand sales destinations before Japan's position as the leading buyer declines, Tokyo hopes to take a central role in the growing market.
The variety of LNG sources also allows users to cut dependence on Middle East oil, an area under significant political risk. The Middle East is responsible for 60% of net exports of crude oil, but just 20% for LNG.
A stronger focus on transshipment facilities will also make it easier for Japan's private sector to take part in the rapid transport of Russian LNG via the Arctic Ocean.